How to Build a Reputation With Investors and Lenders

Tarek El MoussaBlog, Flipping Houses, Marketing, Real Estate Business, Real Estate Investing0 Comments

A man in blue holds a sign that says "Reputation"

success path, success path education, financial success, christina el moussa, tarek el moussa, start a real estate business from home, real estate investingIf you’ve watched a few of the earlier episodes of our show, Flip or Flop, you know that Christina and I did a lot of work with our friend Paul to finance some of our earlier flips. As we’ve grown our business, we’ve started using more of our own earnings from flipping to continue to buy lucrative properties and get better deals, but when we were starting out, we didn’t have the funds to buy even a small flip on our own. So how did we get to the point we’re at now with our financial freedom? It’s basically real estate business 101—we borrowed from lenders and partnered with investors, and we gained a reputation with them for making great deals and paying loans back quickly.

As you get started, though, you might be wondering how to even begin with investors and lenders. While I know how intimidating the idea of finding an investor or getting a hard money loan can be, it really doesn’t take a whole lot of time to build a reputation and trust with the right people.

Partner with an Investor You Know

Consider everyone in your immediate circle of friends, family, coworkers, and people you know in the real estate business. Do you know anyone who might be looking for a good investment opportunity that will pay off quickly? If you have a relationship with someone who has capital to invest, then approach them.

Even if they’re not looking to invest in more or larger properties down the road, they can help you get started now and reap the benefits of the investment, too. They’ll help you with your first deal or two, and you can show other investors and lenders that you’ve proven yourself at least a little bit and that you know how to make a good deal for your next flip.

Start with Hard Money Loans

Let’s assume that you aren’t lucky enough to know anyone looking for a great investment opportunity. If that’s the case, I recommend going for a hard money loan on a fast flip. Hard money loans come with steep interest rates, but if you can flip your property quickly, you won’t pay much of that interest at all. Then you can add that deal to your portfolio, and once you’ve flipped a few houses with hard money loans, you can start approaching private lenders and investors. They’ll see your track record, and they’ll know that you have a good head for real estate investing.

Build a Before-and-After Portfolio

In addition to creating a good financial track record with hard money loans and/or deals with investors you know, you can also build your reputation by showing off the great work you do. Before you start on a flip, take a complete series of “before” pictures. Then, when you have the pictures taken of the finished product for your real estate listings, have a couple of copies printed out to put in your portfolio. You can present this to your investors or lenders to ensure them that you do high-quality work.

Build a Relationship With the Investors You Work With

Finally—and this is probably the biggest lesson you should learn in real estate business 101—when you have a successful deal with an investor or lender, go back to them for your next deal and give them the option to be successful with you again. Your investors are protecting their financial freedom with their deals as much as you’re looking for it with yours, so they’ll respect a flipper who continues to bring them good investment opportunities.

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